tv Countdown to the Closing Bell FOX Business October 9, 2012 3:00pm-4:00pm EDT
liz: i am liz claman. last hour of trading. count down to the closing bell begins right now. markets are invested they. at 3:00 eastern time here is why. don't know why anybody is surprised about this but the international monetary fund cut its global growth forecast for 2012-2013. some key countries like spain and france may miss the target. we are falling at a session lows and the dow jones industrials down 71 points was down up off of the floor we have a long way to go to see any green with the dow jones industrials. who is getting hit in your portfolio. we can bring up the dow component name in tell. the biggest lagger after confirmed it would be cutting firms from its security unit. the energy sector because we are always looking for positivity
sparking green on the board today. happens to be the only sector in the s&p 500 that is moving hire. the only major sector. the sector's rally in alongside as high tensions in the middle east counter the imf growth cuts. and ignited by a visit from german chancellor angela merkel where she said the austerity package for greece will pay off. it is tough medicine. the greeks don't want to hear that. mostly greek money would be bailing out greece. they get a larger voice here and don't like her that much. things remain -- except for the lovely tear-gas bomb, a couple molotov cocktails but the police were there and you had communists and anarchists and occupy wall street.
you never know. guess who showed up. our floor show trader. let's go to the stock exchange, cme group and nynex. is that worth a 78 point loss, restating what the growth targets for the entire world would be. >> if you are looking for an excuse for the market to pull back let's take a look at what is going on with the euro and spain in particular but the market pullback you can blame on avalanche high tech and intel part of the dow jones industrial and apple becomes part of the dow which we expect happen shortly will have the same impact. but apple led the market lower. [talking over each other] tracy: the number to watch for apple is $631.81. we are not there yet. we are above that. if we were to hit that, that would mean 10% of the stock has been shaved off of september 19th.
>> we have broken through that. the composite index didn't recover as strongly as apple did. that is your shot across the bout and the correction the market is in. liz: let me bring you from the cme. bolt is down another $8 even -- piling in tons of liquidity. should that be positive? >> folks are taking things off of the table. we had vanguard saves for the first time ever we had more folks involved with bonds than stocks so there's something funny going on and it will come to fruition -- 5% on the air and broader index up 16%. a lot of guys like myself are nervous and behind me they are nervous and we will see what the next issue is to drop and could be something in the middle east and that is where oil is.
liz: elliott is watching oil. crude is up if you look at it a decent move today. does this really become the we should moving the equities market? >> tough to call. the conventional moving wisdom is that what is good for europe is good for crude. i don't hold with that. is like the other fellows said. the market is the only truth. crew is higher today. keep an eye on it but i can't say it is what is going on in europe. that is the general opinion. point that we are looking at so many issues but as it pertains to what is going on with the markets do you really think that is the case? that we are going to see oil
moving the concerns happening with the equities market and to that end the vix couple little bit today is still around 16. that is relatively low. i am thinking everyone is so worried, vanguard got mentioned and more people are invested in bonds, doesn't that mean we may see a real rally at some point? >> my big picture concern is as mentioned vanguard is managing more money in bonds and equities. fidelity also said the same thing. that is the macro economic item to keep a close eye on because when the air comes out of the bond market will make a correction and equities look like child's play. it is a very dangerous place for anybody to take a look for individual investors and equities need to have protection weather they're buying -- if you are not invested on the long side i would suggest you will have the ability to buy stocks much cheaper. liz: breaking news on wells fargo. thank you for joining us.
the u.s. attorney general is striking against wells fargo. let's get to robert gray. robert: it is a civil mortgage fraud lawsuit. the u.s. attorney state attorney office in man hadn't filing a lawsuit againsthattan filing a lawsuit against wells fargo the government complaint looking at a decade of misconduct in connection with wells fargo participation in the federal housing administration's direct endorsement when there program and as a result of wells fargo's false certification the f h a paid hundreds of millions of dollars in insurance claims on thousands of mortgages which defaulted. they are going after wells fargo with a civil mortgage fraud lawsuit going back more than a decade. we will follow this story for you. liz: the stock is down 1/2% from
wells fargo. very successful, southern district of new york for going after insider trading and other cases and it is wells fargo talking about is false certifications. we are watching the story closely. the dow is down 1/2% at the moment..o cf1 o robert gray will interrupt and get us more on this and according to adam shapiro where is the news? ten years of misconduct in connection with wells fargo participation in the f h a direct endorsement lender program. as soon as we get more we will get it to you. let's go back to the markets and your money. what are you reacting to and why everyone is so nervous we seeing a sell-off of 83 points is the volatility index relatively low? let's bring in jim king, our guest today. south texas money-management president and chief economist joining me for the last hour of trading.
you folks in south texas don't scare so easily. >> a lot of things people are worried about, china and the middle east and europe, fiscal cliff, these have been highly telegraphed and -- liz: you are telling me the same thing i did at the top of the show. is anybody surprised by this. the imf says we are downgrading our estimates for the entire planet. be smarter than the rest of these government agencies. we knew that was going to happen. are you bullish on stocks? >> the imf is playing catch up. everybody -- [talking over each other] >> that shouldn't be a surprise. we are bullish on stocks the next few months and strong headwinds in the way of declining policy and the fiscal side that we should see. in the next two to three months but we are trading in a narrow trading range. given the run we had, a pullback is what you expect looking at
data. liz: is a boring question because we're not there yet. is like chinese water torture but facing a recession or going away, for all intents and purposes let's use a driving analogy. if the u.s. investor is driving a car, driving away from a recession or thwart its and investing accordingly would be to do what? >> great question. the drivers of recession have typically recessions led by crashes or declines and those are on the bottom for the last year or so and coming out. that is one of the reasons i don't expect a recession. those drivers in consumer goods have already crashed. we are seeing 1% to 2% gdp growth consistent with the numbers and that is alternative territory for the u.s. and expansion. liz: housing has bottom did the the the war is turning around? same with ottos, no crash coming? what about a potential bond market bubble? you just heard scotty chilllady
about vanguard. this gigantic fund management company. a lot of the need vanguard funds, now has more people invested in bonds and stocks on the tipping point. >> it is interesting. liz: not a stock by signal is what i am trying to get you to say. >> that was my interpretation, not his. what scares me is to flip around and say money and equity at an all-time high because of concerns for me and that is whao i mean by all these things the market is priced in. i don't see overvalued markets. liz: is the investing opportunity short-term or long-term like we used to do it? >> definitely long-term. i would avoid short-term knee-jerk responses. liz: one of your picks is wells fargo. i you concerned about the news that just broke? >> a little bit but not really. this is the policy financials in general are facing and this case is just a great example of some
of what they have to face. we have been underweight financials for lots of reasons but wells fargo, the best house and an improving neighborhood. liz: still holding steady and down 1/2%. jim is coming back with more names where he expects to see growth where he believes you should put your money and now the one in the coming up and we have 50 minutes down 83 points. what is up? if you stretch it out over several years bold up 450% over the past ten years. can this run continue or is gold a bobble poised to pop? we have asked that question before and jacobs says he believes it is ready to burst. he will explain why you will not believe how low the price of gold can go. listen up.
liz: their phone trading down 1-1/3%. we pick the prior day picture to see what is happening. competition is closing on the payment devices with thousands of new york city taxis. and it started to get tough around march and you can see what is up here. april, may, june and july and is not a good time for veryphone. we had jack foresee who is the ceo and also of twitter he came on a month or two ago with howard schultz to talk about the company's global payment deal. the battle for mobile payment is big but the battle between veryphone and square heated up
with mayor bloomberg spotting the credit card reader for himself recently. that is what has happened. they are now winning out on that. let's look at the dow jones industrials. we have five movers to the upside looking at chevron. seems to be pretty decent. energy is the one sector doing well in the s&p. nicole petallides at stock exchange. big downgrades affecting a lot of people's portfolio. >> look at the tech names which are on the dow jones industrial average. let's take a closer look at hewlett-packard, dell and intel. del reading from citigroup on your tax stocks is not a good day. hewlett-packard was initiated, the price target of $13.50. still has room to go to the downside and initiated with a cell and citigroup and the price target $8.50 so that would be another dollar lower than where it is and then there is in tel
downgrading, bernstein downgraded to underperform from a market performer and also the new price target, $26 from $32. still higher from where it is but the attack is the group waiting today. the nasdaq composite down 1.3%. liz: i am wearing silver hoops to night, not gold. it has been a wild ride. gold is up more than 450% over the past ten years. an incredible performer. gold has extended losses into a third day and these trends are indicators of -- let's ask my next guest who thinks the bubble is ready to burst. he says gold will sink on your screen to $700 in five years. jacobs is the director -- 1,066 right now. he is director and chief
investment strategist at chartres profit capital. on the gold bugs all over you? >> when you make a prediction liz: why do you think this is going to happen especially at a time when there is so much cash thanks to central banks and that is very negative for currencies and positive for gold. >> a lot of people bought gold the specially since 2000. there were $250 an ounce. we have printing and volatile markets and currency devaluation. liz: are you saying that is overspeculation? >> a speculative period that we are at a point when this is priced. the fundamental reasons for buying gold were correct but once we get 600% from the 2000 lows or thousands from the 1970s, something that is supposed to be at stable asset is priced. liz: parabolic price increases
accept it has felt a middle steadier over the last several years. >> it is parabolic like this. liz: let's show the ten year chart and talk about the fact that people treat it like it is some special type of magical substance. you say it should be treated as a simple commodity. >> it is more valuable than other commodities and more important than other commodities. once you start relying on something like they did in housing. people who always need housing it is a stable asset class. once everyone starts jumping to a certain asset class and everyone is doing it it no long. liz: anyone can stand where you are standing and make a wild prediction but we need to know if there are people who believe in what you are saying and make money off of that belief? what you're recommending in terms as in investable opportunity?
>> most expect inflation as if we have another recession with a lot of gold bugs are willing to admit there will be a deflationary scenario which means prices of everything will fall like oil and copper. liz: can you short something? >> we are shorting goldminers and people don't want a lot of risk and we recommend putting options, i know some people don't want to take full risks with just one short place. we are doing a fair trade where we believe gold will fall but platinum, diamond and natural gas and home builders. liz: short the gold miners and better than gold and diamond and natural gas help natural-gas. i am waiting for the big move. a lot of people said that and the metal platinum. i want to point this out. net long positions have been building seven weeks in a row for gold. that tends to show.
>> thank you. liz: chief investment strategist at charge profits capital. we have to wait around five years to see if your prediction is right but $700 in five years. thank you. closing bell ringing in 39 minutes. netflix. how many of you have phoned the stock and can't sell it? it has taken a huge hit over the years after being downgraded by bank of america. the day after it did pretty well. get ready to step into the ring for a ratings rumble. two analysts totally different opinions. one with a buy and one with a sell ready to duke it out. a ratings rumble. up next, charlie gasparino has exclusive details on a loan fugitive running from the government's massive insider trading crackdown. stay tuned. everyone has goals.
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liz: your fox business market check. dow jones -- getting killed again down 105. we getting back down there. the nasdaq getting hammered down 1.5%. watch out. a lot of that apple getting very close to having blocked off 10% from its high on september 19th. let's look at warashore. we profiled the ceo and the company has an in home hiv test. it hits store shelves today. in the next hour breaking news. cialis -- ceo douglas michaels, first business network interview telling us about it and revealing its big celebrity spokesperson. somebody very famous will be their celebrity spokesperson. he will reveal that on fox business. you do not want to miss it. that is in the next hour.
convicted insider trader raj rajaratnam should have followed the example of a lesser-known figure and fled the country rather than face years behind bars. recommending people flee the country? >> i knew someone who knew someone who fled to italy and a strong extradition treaty from italy to the u.s.. generally force you to come back. india and sri lanka where he is from, is not that strong. it is the interesting thing in this case. there is one fugitive, one person who was busted his name is deep shop, an analyst at moody's gave a tip to a woman who is the main witness on hilton being bought by blackstone and that was one of the counts he was convicted of. he is a fugitive. you went back to indiana and
fired and indicted by the justice department and filed civil charges and there was one lame attempt to get him like a local magistrate to convince him to come back. [talking over each other] charlie: just -- [talking over each other] charlie: he is over inerrant charged with securities fraud and faces five years in jail and raj rajaratnam serving a ten year sentence and they have essentially given up trying to get him back. [talking over each other] charlie: extradition charges in india pretty weak especially for this fraud. it is not like murder or rape. it is security for criminals and securities fraud and insider trading is not the worst thing in the world. i am not saying it is good but i put it low on the totem pole of
things that are the real bad stuff and bernie madoff -- an extradition on raj rajaratnam he went back to sri lanka which listen, the law in sri lanka and similar to that in the u.s. and here's what we spoke with prosecutors associated with this case. would you have done it? we would have tried to. we don't holds a lot of possibility here. and their arrested him in an impromptu way. and they arrested him on the spot. he has said one of the reasons -- the rationale is he could have gone to sri lanka. it is still on the lam for two years. 2010 is when he was indicted and has been on the lam ever since.
tracy: find him -- that is in the poor. charlie: are you in to that. [talking over each other] charlie: you are inflicting pain. you are [talking over each other] [talking over each other] charlie: closing bell ringing in 29 minutes. liz: we are down 101 points. the session is down 105. netflix streaming movies to twenty-seven million customers. they have shows and smart phones and tablets and everything that is enough money streaming in? stocks saudis and strengthen a last few days. today taking a dive but netflix takes to a ratings rumble. analyst with a buy and one with a sell. who wins out for your portfolio?
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>> i'm robert gray with your fox business brief. capitol one has confirmed the subject of a service denial attack. a group claiming to be allied with an us lackic terror organization -- islamic terror organization had planned an attack today. fox business has learned the group is targeting sun trust tomorrow and regents financial on thursday. sun trust has told fox business they are aware of the threat and are working to mitigate any disruptions should an attack occur. meanwhile, former general electric chief executive jack
welch has resigned as a contributor to fortune magazine. welch made news last week when he took to his twitter account and tweeted the labor of bureau statistics intentionally boosted the latest jobs report. and the bearish tone on wall street continues today with stocks near session lows. investors are bracing for a possible disappointing earnings season that starts after the closing bell, but right now we continue the countdown with liz claman. ♪ liz: okay, gang. i want to get wells fargo's chart up right now. when we first broke the news that united states attorney from the southern district of new york was going after wells fargo, it was down just about a half a percent. it kind of meandered there, this news broke shortly after 3 eastern. it is now down a full two-plus i percentage points. basically, the charge is that it's a civil mortgage fraud lawsuit against wells fargo. the government's complaint seeks damages and civil penalties in
essence saying that as a result of wells fargo's alleged false certifications of mortgages, the fha, okay, has paid hundreds of millions of dollars in insurance claims on thousands of mortgages that defaulted. in essence saying that wells fargo stamped through a bunch of junkie mortgages. years later after the housing bubble implodes. so at the moment we see a big leg down, it's gapping down at the moment, down more than 2% for wells fargo. speaking of down, a big down day for netflix as the stock loses most of its gains that it got yesterday. for all of you who were saying it's finally gaining some of it back, not today. we check in with nicole we heat tease. >> reporter: that's right. down over 10% today, certainly a stock that has a lot of volume and volatility on a regular basi're seeing it sell off on an analyst downgrade. bank of america/merrill lynch
cut netflix to an underperform from a buy. in the last week we heard from citigroup saying it's a screaming by, morgan stanley raising its overweight from equal weight with a price target of $85. we have moody's on the other side of the coin saying they potentially may downgrade netflix. so netflix has been all over the map. last summer it was a $300 stock, then it sold off bigtime. this month, the month of october, it's up over 20%. so the question is, which way is netflix going? is it going to expand globally and compete now, or is it the other side of the coin, is it overvalued here at this level? this is what we continue to follow on netflix, but today down over 10%. liz: okay, let's follow it. so merrill lynch downgrades shares of netflix, whitney tilson did the opposite earlier this month. he changed his very negative view after famously betting against it. now whitney loves it. has netflix turned a corner, and which corner? it's time for a netflix ratings
rumble. we're joined by two analysts. in the buy horner, andy hard grave, he has a solid buy on the stock. and in the sell corner, justin, he is from dawson james securities. gentlemen, thank you so much for joining us. andy, the stock, while up, i don't know, 20% or so month to date, is a dismal performer over the past year. tell me why you like it. >> we like it because we think the subscriber rates can still grow, we think the margins can expand, and we think international is an investment rather than just a -- we think they make a lot more money. liz: you think international is a great opportunity, you think the book value, assets plus liabilities, is, for example, folks, what he's saying is if you have to sell the entire company, still, the stock is really quite cheap at point, am i correct? >> well, what i'm saying is i think you're getting the stock's
discounted right now because international is losing money. but if you look at that as an investment, that's something that could turn positive and benefit you over time. liz: justin is not buying this argument. give me three reasons, justin, why you disagree with andy and you've got a totally opposite call on this. >> i'm glad to be here. we believe that, as andy mentioned margin expansion, we believe that much of the street holds that view and, frankly, we disagree. at this point we believe that for netflix to grow their subscriber base, we believe that at the margins that's very closely linked to new content acquisitions. and as such we tend to view content as more of a variable cost as opposed to a fixed cost and believe that that will constrain margins going forward and limit potential upside to the stock. and then specifically in terms of international growth we view international as canada and everything else. when netflix moved into canada, it was a very favorable market
where they had much name recognition already, and even canada took several quarters or to reach break even. liz: okay. >> and much of the international market, netflix faces additional issues. for example, in latin america with lower broadband penetration rates and in other parts of the world with higher levels of piracy than what we see in the united states. liz: right. andy, as i look at all that's going on out there, i get nervous about the competition. verizon's out there, amazon struck the deal with epix that has deals with a lot of studios. what do you think about the competition, andy? >> well, we're always worried about competition, but you add all those guys up together right now, and you have a subscriber base that's about a third as big as netflix's, so they have massive scale advantages. i kind of agree that content is sort of variable to a certain extent, and so far they've managed it extraordinarily well, generating 50% plus incremental contribution margins.
so i would say all those things make the business look good. liz: i want to bring up whitney, and justin may bristle at this because whitney tilson reversed what had been sort of a justin call and now likes netflix. here's what whitney said. there is a lot of talk about competitors, but i don't see any detectable competition showing up. do you, justin? is he wrong? why? >> well, i think when you view competition in regards to netflix, you have to look at it on the margins. and not only does additional competition make acquiring an additional marginal subscriber potentially more expensive, but it also creates additional competition in terms of bidding on content. you know, for example, amazon is now showing that they have a greater commitment to streaming, and i throw out an example that they now also offer the same epix catalog of content that's one of the staples of netflix. liz: okay, and original content, they've got this show coming up
called "house of cards" with kevin spacey. andy, is that really going to be a driver? if you size showtime as an example, a couple of years ago they didn't have programming, now it does. they've done extraordinarily well, they're one of the most valuable cable networks. could innocent flick take on everybody -- netflix take on everybody with original programming? >> yeah, it certainly could. and i just want to make a point about competition. i think there's the disconception that this is a zero sum game. i think that's totally wrong, and we see that in our survey data. if netflix original content comes out and it's good, that will be even more the case, people will subscribe for those shows. liz: i have one last question but, justin, i'll let you finish. the big question, could netflix be an acquisition, i'm thinking by amazon? justin, yes or no? >> well, you know, i don't believe that at these levels that netflix would be an acquisition target for amazon. mostly in terms of when you look
at the costs it would likely take to acquire netflix, amazon could likely, you know, practically offer a free subscription to their service for six months, acquire new subscribers and be able to build a subscriber base as large as netflix's for a fraction of the cost. liz: justin and andy, great to have you in our ratings rumble. andy's got a buy, justin's got a sell. thanks, gang, really appreciate it. >> thank you, liz. >> thanks. liz: anytime. fifteen minutes before the closing bell. coming up, jim key, we're bringing him back. he's coming up on the set in just a minute. his number one moneymaker. he'll tell us why his pick is what investors should be falling into. does that give you a hint? that's next. ♪ ♪ [ mujahid ] there was a little bit of trepidation,
not quite knowing what the next phase was going to be, you know, because you en, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talkinabout, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪
liz: stand by. after the closing bell, aluminum maker alcoa becomes the first major u.s. company to report third quarter results. just remember, since 2009 i think alcoa has missed estimates 72% of the time. [laughter] sandra smith, the preview. >> so it doesn't always indicate the actual earnings season ahead, but we're watching shares closely. and they are moving higher ahead that earnings report after the bell today, actually leading the dow 30 components right now, up just about eight-tenths of 1%. you can see the intraday chart there. year to date this is a stock that's gained just over five -- sorry, we just switched over -- just over 5%. analysts are expecting alcoa to break even on revenue of $5.5
billion for the quarter. many consider alcoa a bramer the for the earnings season, but there is something to keep in mind here. since 2009 when alcoa missed wall street's earnings forecast nearly 73% of the time as liz just mentioned, of the companies in the s&p 500 went on to beat profit estimates. so three-quart earth of the time they went on to have very good earnings. alcoa has been curbing production to control expenses, the company's projected a global aluminum supply shortage. investors are waiting to find out if they're sticking with that call, and finally investors who watch the outlook for prices, prices of aluminum have fallen industry wide as a result of global oversupply exacerbated by the slowdown in the activity that we've seen in asia and continuing weakness in europe. don't miss all the coverage of these breaking earnings after the bell tonight, alcoa's earnings row leased -- releasedless than 30 minutes from now. liz, it's going to be a big one.
we've also got yum brands. liz: remember how taco bell break outnumbers do depends, perhaps, on chipotle's stock tomorrow. let me get back to jim key, he's back with the companies he really likes right now, and he says no matter what, have growth potential. let me begin with your first one, and that's emc storage. >> we're looking for markets like this that create opportunities. when apple's down, quality companies like emc go on sale. emc is tapped into two broad secular themes, cloud computing and big data, analytics based on transactions.3 it's cheap, we like it a lot. liz riz and they may make another acquisition which pumps then up. let me get to your second one, sanofi. you say the emerging market play is your choice. >> that's right. emerging market growth is slowing, and that will put downward pressure on commodity prices. that's still where most of the growth is in the world, and we
merging market consumers tend the first thing they want when their incomes rise is health care. sanofi is the world's fourth largest pharma company by prescription sales based in france. it's got less european exposure than its peers, and that's a key differentiator. it, too, is a well-managed, quality company. it's cheap and pays a decent di tend. we like it a lot as well. liz: and now jim key's number one moneymaker. this is what we're asking people to do, come up with their favorite stock going forward, and what is it, jim? >> well, we've had good success with gap. gap is a retailer that tends to deliver in a space that's prett@ hard to do that. all its four core segments -- liz: yeah, but only of over the past year. it's been terrible the past couple, still room to run? >> well, we think so. it is a key beneficiary of this emerging markets trend because that lower commodities prices means lower cotton prices, and that helps gap's bottom line
directly. liz: old navy, banana republic, athlete. some of the names under their umbrella. jim key. yeah, we're down 101 points for the dow which crossed the flat line 20 times in the first hour. coming up with the closing bell just six minutes away, we've got alcoa earnings, yum brands as well. don't move. and for a behind-the-scenes action, follow me on twitter @liz claman. you've got answers, they've got answers, and so do we. coming up, we're going to tell you today's hot stock to watch. stay tuned. ♪ [ male announcer ] what if you had thermal night-visionoggles,
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liz: they're cheering in the land of gold-tipped cable splitters and boom boxes. yeah, who else. radio shack, check it out, up 12% right now. unbelievable. this has been a dog for so long but guess what? bank of america upgraded it to a buy today from an underperform. the stock, yeah, why does bac say that? well, they say the short interest has hit an all-time high for the float. 42% of the float is being shorted, so they say any positive news whether somebody private equity wanted to buy it or they get a new hotshot ceo, any glimmer of hope would really cause a painful short squeeze. with 42% of the float being shorted, we've seen stranger things happen in this market. up nearly 12% right now, but guess what? just a few minutes before that
closing bell rings. let's get to david asman. david: you know, the first hour everything looked fine. it was kind of flatlining and then it went down. looks like it's going to end in the triple digits as well. again, the s&p is doing a little worse than the dow today. nasdaq hit hard. of course, oil is one of the few things that got a pop besides radioshack today. let's go to nicole petallides at the new york stock exchange as we begin this incredible earnings season, more in a moment. let's start talking about apple. apple, we saw actually came off its lows. >> reporter: that's right. it traded as low as 623, dave and liz, and that was a 10% correction from its all-time high. but it was interesting watching it go back into positive territory, so we'll see. there's been a lot of talk about the ipad mini. by the way, dave, i like the sound effects. [laughter] that was cute. david: pow, pow, pow, pow! liz: my sound effts